This China Slowdown Is Different

Beijing is starting to curb investment-led growth. It won't be painless.

By

Leland R. Miller

and Craig Charney

July 14, 2014 12:49 p.m. ET

China announces official second-quarter GDP on Tuesday, a figure widely expected to reflect official guarantees of continued strong growth. But data from the China Beige Book—a private survey of 2,200 firms nationwide—suggest that the Chinese economy isn't expanding as Beijing's numbers would imply. Actually, the second quarter saw another broad-based slowdown.

Yet it is hardly news that GDP isn't a reliable gauge of growth or credit conditions across China's economy. The real news is that this slowdown may be the...